PNC Financial Services Group

Economic and market conditions · Economic recession and downturns

Our business and overall financial performance are affected to a significant extent by economic conditions, primarily in the U.S. Declining or adverse economic conditions and adverse changes in investor, consumer and business sentiment generally result in reduced business activity, which may decrease the demand for our products and services or reduce the number of creditworthy borrowers.

Geopolitical and trade · Regulatory and policy uncertainty

Congress and the current presidential administration have introduced and may continue to introduce changes in the laws or policies applicable to us and the agencies that regulate us, including their interpretations of rules and guidelines. These changes may subject financial institutions like us to changes in regulation, supervision and enforcement that are difficult to predict and uncertain for a period of time.

Geopolitical and trade · Trade policies tariffs and sanctions

We operate in an uncertain economic environment due to sustained inflationary pressures, including higher prices and lower housing affordability, and fluctuating trade policies (including tariffs), combined with geopolitical tensions.

Natural and catastrophic events · Pandemic and public health crises

Our business and financial performance could be adversely affected, directly or indirectly, by disasters, natural or otherwise, by terrorist activities, by international hostilities or by domestic civil unrest. Neither the occurrence nor the potential impact of natural and other disasters (including severe weather events), health emergencies, dislocations, geopolitical instabilities, terrorist activities, international hostilities or other extraordinary events beyond PNC's control can be predicted.

Natural and catastrophic events · Terrorism and security threats

Our business and financial performance could be adversely affected, directly or indirectly, by disasters, natural or otherwise, by terrorist activities, by international hostilities or by domestic civil unrest.

Natural and catastrophic events · Climate change and environmental impact

Climate-related risks could adversely affect our business and performance, including indirectly through impacts on our customers. We and our customers may face cost increases, asset value reductions, the reduced availability of insurance or sufficient insurance to cover losses, operations disruptions and changes and other impacts because of climate change.

Strategic execution · Merger acquisition and divestiture risks

We grow our business in part by acquiring other financial services businesses and businesses with technologies or other assets valuable to us from time to time. Acquisitions present several risks and uncertainties related both to the acquisition transactions themselves and to the integration of the acquired businesses into PNC after closing.

Customer and revenue · Customer concentration and key customer dependence

Our success depends on our ability to attract and retain customers for our products and services. Our performance is subject to risks associated with declines in customer demand for our products and services.

Market position and competition · Pricing pressure and margin compression

In addition, in our interest rate sensitive businesses, competitive pressures to increase rates on deposits or decrease rates on loans could reduce our net interest margin, negatively impacting our net interest income.

Customer and revenue · Customer retention and subscription renewal

Our ability to attract and retain customer deposits is impacted by the levels of interest rates, as customers balance the benefits of bank accounts with deposit insurance and some of the convenience associated with more traditional banking products against the possibility of higher yields from other investments.

Innovation and product development · Intellectual property protection and infringement

Our use of technology is dependent on having the right to use its underlying intellectual property. In some cases, we develop internally the intellectual property embedded in the technology we use. In others, we or our vendors license the use of intellectual property from others. Where we rely on access to third-party intellectual property, whether now or in the future, it may not be available to us on commercially reasonable terms or at all.

Credit and liquidity · Credit risk and customer defaults

Our business and financial results are subject to risks associated with the creditworthiness of our customers and counterparties. Credit risk is inherent in the financial services business. It results from, among other things, extending credit to customers, purchasing securities, and entering into financial derivative transactions and certain guarantee contracts.

International and currency · International operations and emerging markets

Our foreign business activities and operations continue to be a relatively small part of our overall business. As a result, the direct impact on our business and financial performance from economic conditions outside the U.S. is not likely to be significant, although the impact would increase if we expanded our foreign business and operations more than nominally.

Credit and liquidity · Liquidity and cash flow constraints

Our liquidity could be impaired as a result of unanticipated outflows of cash or collateral, unexpected loss of consumer deposits or higher than anticipated draws on lending-related commitments, an inability to sell assets (or to sell assets at favorable times or prices), a default by a counterparty, our inability to access other sources of liquidity.

Market and investment · Asset valuation and impairment

The concentration and mix of our assets could increase the potential for significant credit losses. In the ordinary course of business, we often have heightened credit exposure to a particular industry, geography, asset class or financial market.

Digital transformation and innovation · Technology implementation and upgrades

As a large financial services company, we handle a substantial volume of customer and other financial transactions. As a result, we rely heavily on information systems to conduct our business and to process, record, monitor and report on our transactions and those of our customers.

Cybersecurity and data protection · Third party data security and vendors

The same risks are presented by attacks potentially affecting information held by third parties on our behalf or accessed by third parties, including those offering financial applications, on behalf of our customers. These risks also arise when third parties with whom we do business, or their vendors or other entities with whom they do business, are themselves subject to cyber attacks and breaches.

Technology infrastructure · Cloud services and data center operations

We rely on technology maintained by other companies. We use other companies both to provide products and services directly to us and to assist us in providing products and services to our customers. Others provide the infrastructure that supports, for example, communications, payment, clearing and settlement systems, or information processing and storage.

Data and privacy · Data protection and privacy laws

Privacy and personal data rights initiatives have imposed and will continue to impose additional operational burdens on PNC, and they may limit our ability to pursue desirable business initiatives and increase the risks associated with any future gathering, maintenance, use, transmission and other processing of personal information.

Legal and litigation · Litigation and legal proceedings

We are at risk for the impact of adverse results in legal proceedings. Many aspects of our business involve substantial risk of legal liability. We have been named or threatened to be named as defendants in various lawsuits arising from our business activities.